Domestic equity benchmarks clocked strong gains on January 9 in light of positive global cues amid hopes that the US Fed may decrease the pace of rate hikes.
"Sentiment on Wall Street got a boost last week from a benign blend of solid US payroll gains and slower wage growth, combined with a sharp fall in service-sector activity. The market scaled back bets on rate hikes for the Federal Reserve," reported Reuters.
The reopening of China also boosted sentiment. As per a Reuters report, after three years, mainland China opened sea and land crossings with Hong Kong and ended a requirement for incoming travellers to quarantine, dismantling a final pillar of a zero-Covid policy.
The optimism in the global market spilt into the domestic market, giving a strong push to the benchmark indices.
Sensex jumped 989 points in intraday trade and ended 847 points, or 1.41 percent, higher at 60,747.31. The Nifty closed the day at 18,101.20, up 242 points, or 1.35 percent.
The mid and smallcaps also witnessed decent buying. The BSE Midcap index rose 0.93 percent while the Smallcap index saw a gain of 0.50 percent.
The overall market capitalisation of BSE-listed firms rose to ₹283 lakh crore from ₹279.8 lakh crore in the previous session, making investors richer by ₹3.2 lakh crore in a single day.
Nearly 150 stocks, including PNC Infratech, Power Finance Corporation, Jindal Steel & Power, IDBI Bank, Godfrey Phillips India, Anand Rathi Wealth and Abbott India, hit their 52-week highs in intraday trade on BSE.
Crude oil prices jumped on optimism of China reopening. Brent Crude saw a sharp gain of over 3 percent and traded near the $81 per barrel mark.
The rupee, on the other gain, rose significantly due to weakness in the dollar index and gains in the domestic market. The domestic unit settled with a gain of 36 paise at 82.36 per dollar.
Top Sensex gainers: Shares of Mahindra and Mahindra, HCL Tech, TCS, IndusInd Bank and Tech Mahindra ended as the top gainers in the Sensex index.
Top Sensex losers: Only three stocks - Titan, Bajaj Finserv and Maruti - ended in the red in the 30-share pack Sensex.
Sectoral picture
Barring Nifty Consumer Durables (down 0.46 percent), all sectoral indices ended with gains. Nifty IT clocked a strong gain of 2.83 percent to lead the sectoral pack.
Nifty Auto, Metal, PSU Bank and Oil & Gas indices rose over a percent each.
Experts' views on markets
Shrikant Chouhan, Head of Equity Research (Retail), Kotak Securities pointed out that positive undercurrent in global markets had a rub-off effect on local equities, as investors resorted to short-covering after last week's correction helping key benchmark indices recapture their psychological levels.
"With China steadily lifting covid restrictions, there are hopes that demand may pick up going ahead, which could give breathing space for the markets already battling recession fears, higher interest rate regime, and benign inflation levels. Despite the recovery, markets may remain choppy as most of the lingering worries are yet to subside," said Chouhan.
"Wall Street climbed in anticipation of a less aggressive US Fed as wage growth slowed and service activity contracted, fuelling bets that inflation is moderating. Furthermore, the December payrolls rising higher than anticipated increased the possibility of a softer landing for the US economy. These gains were also absorbed by the domestic market, with IT being the biggest gainer ahead of the release of sector earnings, as the favourable US economy boosted sector optimism," said Vinod Nair, Head of Research at Geojit Financial Services.
Technical views by experts
Chouhan said Nifty formed a strong bullish candle on daily charts and promising reversal formation is indicating a further uptrend from the current levels.
"For bulls, 18,000 would be the sacrosanct support zone, and above the same, the pullback formation will continue till 18,200-18,270. On the flip side, below 18,000, the uptrend would be vulnerable and the index could retest the level of 17,950-17,900," said Chouhan.
Gaurav Ratnaparkhi, Head of Technical Research, Sharekhan by BNP Paribas said the Nifty, on January 6, had moved down towards the lows seen in the last couple of weeks. It had fallen towards the 20 WMA (weekly moving average), daily lower Bollinger Band and the 50 percent retracement of the Sept-Dec 2022 rally.
Ratnaparkhi further added that these parameters were present near the lower end of the short-term consolidation range, which is 17,800. Thereon the index witnessed a smart bounce on January 09. It can go on till 18,200-18,260 on the higher side.
"The level of 18,000 will act as immediate support. The overall structure for the last few sessions shows that the sharp moves in both directions are part of the short-term consolidation process," said Ratnaparkhi.
Key market data
Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of MintGenie.
